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Here in Massachusetts, mortgage fraud is not a crime
Pretty bizarre given all that has happened in the global economy over the past few years, but sadly it’s true.
Media set out to find examples of scammers doing jail time here in Massachusetts for mortgage fraud given the explosion in foreclosures, especially in poor neighborhoods across the state.
Instead, they came back pretty much empty handed and for a reason that floored us all. Mortgage fraud is not a criminal offense here in the Bay State, accordingly to Attorney General Martha Coakley.
Given that mortgage fraud is considered a civil but not a criminal offense in Massachusetts, Coakley has had her hands tied behind her back when it comes to going after some of the scammers. While mortgage fraud is a crime under federal law, there are many cases in this very local kind of abuse that should not or can’t be pursued by the feds.
Take a look at this issue – which has pretty much gone largely unreported until now – in a weekly column for Banker & Tradesman.
There’s no doubt we saw an orgy of mortgage fraud, both during the bubble years and even after the market began to collapse.
Small time speculators wreaked a trail of foreclosures in poor neighborhoods from Boston to Springfield. The schemes were brazen and simple: Flip three barely rehabbed condos in a Dorchester triple-decker to straw buyers for $350,000 or so each, get no doc loans from some brainless subprime mortgage factory, and walk away with a million bucks.
Nine months later, all three units would be foreclosed on and sold at auction back to their lenders, ready to be bought by another group of fraudsters.
It really does not seem much different than walking into a bank with a gun and demanding money.
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